Gold prices recovered from an 18-month low on Tuesday, as the U.S. dollar softened, . Comex gold futures for August delivery rose 0.47% to $1,204.50 a troy ounce as of 10:37 AM ET (14:37 GMT). Gold fell to an 18-month low on Monday, after economic turmoil in Turkey caused the Turkish lira to plunge to an all-time low of 7.1289.

In commodities, gold futures rose 0.33% to $1,202.90 a troy ounce, while crude oil futures increased 1.44% to $68.17 a barrel. The U.S. dollar index, which measures the greenback against a basket of six major currencies, rose 0.07% to 96.23.

The gold market sold-off significantly during the Monday’s session breaking below the $1200 level which offered strong psychological support to the market. The market is strongly impacted by the Turkish situation and relative strong dollar. The next significant support for the gold prices is at $1140 level and in order to turn around, it needs to break above the $1205 level.

Markets can get a respite from the rally today or for a few days at best, but the worst is still ahead as we could see the sale-off on stock and bonds markets. The Turkish lira has stabilized near 6.5 per dollar after the country’s central bank had announced the measures to maintain liquidity.

Gold markets continue to fall during the Monday session, reaching down towards the $1200 level. In fact, as I record this, the gold market has drifted even below there. For me, that is a very negative turn of events, and could lead to the next leg lower.

Gold prices took it on the chin on Monday, moving lower as concern about Turkey’s currency crisis is buoying the dollar and weighing on gold. The Yuan, the Chinese currency continues to also decline which appears to be correlated to the decline in gold. Gold prices crashed through support which is now resistance near 1,204, which coincides with the August lows and the July 2017 lows. The next level of target support is seen near the January 2017 lows at 1,180.

Other metals were mostly up on the Comex, with silver futures falling 0.75% to $15.180 a troy ounce. Among other precious metals, platinum futures slumped 2.62% to $807.90, while palladium futures decreased 0.83% to $894.10 an ounce. Copper futures rose 0.24% to $2.749 a pound.

The S&P 500 rose 2 points, or 0.10%, to 2,836.18 as of 9:42 AM ET (13:42 GMT), while the Dow increased 12 points, or 0.05%, to 25,326.10 and the tech-heavy Nasdaq Composite gained 17 points, or 0.23%, to 7,857.06.

Although the CFTC Commitment of Traders report is a lagging indicator and difficult to use over the short-run, it can be a handy trend and contrarian indicator when used correctly with well-established trends or in markets at extreme long-term highs or lows.

Based on the early price action, the direction of the December Comex gold futures contract the rest of the session is likely to be determined by trader reaction to the short-term downtrending Gann angle at $1214.70.

Investing.com - Gold prices traded lower on Monday, with spot prices hitting a 17-month low, as concerns over the crisis in Turkey sent investors flocking to the dollar, dampening demand for the precious metal.

Based on the price action by the dollar and gold, it doesn’t look like the Turkish government has done enough to convince traders that it’s making the right moves. And with money managers willing to press gold lower even at multi-year lows, it looks as if the bears will continue to exert their power today. Even if there is an intraday short-covering rally, it will probably be fueled by technical factors which means gold bears will be waiting to re-short at more favorable price levels if the fundamentals don’t improve.

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Will they or won’t they? That is the question. Given the current situation unfolding in Turkey, which is having a dramatic effect on the Euro and in Russia, which saw the Rouble crumble to its lowest level in more than two years, will aggressive counter-trend buyers finally step in and start treating gold like a safe-haven asset, or will they continue to succumb to the stronger U.S. Dollar, which lowers foreign demand for dollar-denominated gold?